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K-REIT: Trading bands.

Tuesday, September 14, 2010

It seems that the worst is over for office rentals in Singapore. There is a general expectation that things have stabilised and we could even see some upside next year.  I have a small position in K-REIT in my frozen portfolio and this small investment is actually enjoying a paper gain now.  So, when would I sell my stake?

We could do a very simple TA for K-REIT even if I do not have access to today's data on ChartNexus. Price touched a high of $1.28 before closing at $1.26. It opened at $1.27 and touched a low of $1.25. So, picturing it mentally, it formed a black spinning top today. That it touched a high of $1.28 is significant as it confirms $1.28 as an important resistance level. Volume was only half of yesterday's which suggests a lack of conviction by sellers today even as price action formed a black candle.  So, the indecision suggested by the black spinning top does not have strong downside pressure, I feel.  In case of continuing downside, where do I see support?

Looking at the chart, it is quite obvious that $1.22 was a major resistance level and I expect this to provide immediate support in case of a move downwards. If this breaks, the next support is at $1.16.  Having said this, you could have noticed an interesting phenomenon. K-REIT seems to be trading in a 6c trading range recently: $1.16 to $1.22 and $1.22 to $1.28.  This is useful information for anyone who is interested in profiting from some range-bound trading.

In the event that $1.28 resistance is taken out, one could therefore expect $1.34 to be the next resistance level if this phenomenon continues to play out.


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